German Chancellor Angela Merkel listens to President Barack Obama address a joint news conference in the Rose Garden of the White House in Washington, May 2, 2014. REUTERS/Kevin Lamarque

In the wake of last fall’s revelation that the National Security Agency had wiretapped German Chancellor Angela Merkel’s cell phone, the report of U.S. intelligence’s involvement in two other likely cases of spying on Germany is mind-boggling.

Now the story has taken a dramatic new turn, with Germany expelling the CIA chief of station in Berlin — an almost unprecedented step by an ally. This unusual action reflects how seriously the Merkel government takes these spying allegations.

What could the CIA hope to gain by infiltrating the BND, the German Federal Intelligence Service, knowing there was a chance that the operation might be exposed? What was worth this risk?

U.S. President Obama and German Chancellor Merkel address joint news conference in the White House Rose Garden in WashingtonCIA and White House officials have said little to answer the question. But the fact that German industry has strong ties to both Russia and Iran may offer a clue. So economic and political intelligence about Germany’s contacts with those countries could be high on the list of potential U.S. intelligence targets. The CIA might for example, be interested in whether the Merkel government – heavily dependent on oil imports from Russia – is thinking about softening its opposition to President Vladimir Putin’s support for Russian-speaking separatists in eastern Ukraine.

Identifying possible terrorists under surveillance by German intelligence agencies could be another reason. Both the CIA and the FBI are keenly aware that the 9/11 al Qaeda plot that brought down the twin towers of the World Trade Center was hatched in Hamburg. Germany has long served as a transit hub between East and West, and it also has a sizable Arab immigrant community.

Potential targets in the German military are another temptation, despite the fact that Germany is a partner of the United States as a fellow North Atlantic Treaty Organization member. But as one U.S. official suggested, the Germans don’t always confide either their military or political strategy — especially in the current climate of mistrust.

The timing, meanwhile, could hardly be worse for the United States. Washington already has severely strained relations with Merkel. Last month, Germany’s federal prosecutor opened a formal investigation of U.S. eavesdropping on the chancellor’s cell phone — which was revealed by Edward Snowden, the former NSA contractor now granted asylum in Russia.

Merkel reacted furiously to the revelations that Washington had been listening to her calls. “Spying among friends,” she said, “is simply unacceptable.” The breach of trust between the two countries, she added, would have to be repaired.

Mobile phone simulating call to German Chancellor Merkel next to a tablet showing the logo of NSA is seen in picture illustration taken in FrankfurtThe White House lamely responded that Merkel’s phone was not currently being wiretapped, and would not be in the future. But it said nothing about the past –indirectly confirming that the NSA had eavesdropped on her.

Tension between Washington and Berlin over intelligence operations keeps getting worse. Last week, it was revealed that a 31-year-old employee of the BND had been arrested for allegedly funneling secrets to the CIA. A second case surfaced on Wednesday, when Berlin police searched the apartment and office of a man said to work for the German Defense Ministry, who is another suspected U.S. spy.

Germans are particularly sensitive to surveillance and spying, given the legacy of the Nazi Gestapo and, more recently, the years of domestic surveillance by the Stasi spy service in Communist East Germany — where Merkel grew up.

“Spying is OK,” one former U.S. intelligence officer told me, “as long as you’re not caught.”

But in the age of Snowden and Chelsea Manning, the former Army private sentenced to 35 years in prison after releasing thousands of secret cables and documents to WikiLeaks, getting caught seems far more likely — and keeping secrets much more difficult. Today, the CIA has to assume that every operation has the potential to be compromised.

The former U.S. intelligence officer, experienced in dealing with the Germans, said the cell phone tapping and newest episodes raise the larger question of whether anyone in Washington is weighing the risks of espionage, and the damage that can be caused by exposure, against the benefits — if any. He wondered if the CIA’s clandestine service “is on auto pilot,” continuing to run these espionage operations because it can.

The spying revelations have created a dilemma for the Obama administration. Either the president knew about the tapping of Merkel’s phone and the newest cases, and failed to disclose that information to her, a close ally — or he did not know. If he was not briefed on these cases, then it would suggest that the White House is not exercising enough control over its own intelligence agencies.

Reinhard GehlenSpying on the German Federal Intelligence Service is particularly sensitive. The reason is, for decades, Berlin has sought a “no-spy” agreement with Washington, which would guarantee that each country would not spy on the other. Berlin has been seeking to be a member of the secret, English-speaking club called Five Eyes, a formal pact in which the United States, Britain, Canada, Australia and New Zealand agree to share intelligence and not spy on each other.

The cell-phone debacle and the latest spying accusations in Germany are particularly ironic, because the United States created the BND. During World War II, Reinhard Gehlen, a German army general, was chief of Fremde Heere Ost (Foreign Armies East), the intelligence unit that spied on the Soviet Union. After the war, Washington was desperate for intelligence on the Russians, so the United states set Gehlen up in Pullach, near Munich, as head of his own intelligence organization — which later became the BND.

Spying of the kind alleged in the case of the BND employee arrested last week would have been justified during the Cold War if, for example, it uncovered information about the Soviet nuclear arsenal — knowledge that in a war could conceivably save the lives of millions of Americans.

But the Cold War is long over. This is 2014 — time for Washington to rethink its relationship with German, its most important European ally.source: Reuters - By David Wise